Buying a home is an exciting milestone, but the mortgage payment is only one part of the financial picture. Property taxes, insurance, utilities, routine maintenance, and unexpected repairs can add much more to the monthly budget than many buyers anticipate.
According to a Credible survey, American homeowners are spending nearly $5,000 more per year on homeownership than they originally expected.
Many Homeowners Underestimate the Costs
The survey found that 63% of homeowners underestimated the true cost of owning a home, while 69% said their monthly housing expenses were higher than anticipated.
First-time buyers were the most likely to be surprised. Seventy-three percent said they had underestimated their expenses, compared with homeowners who had purchased before.
Younger homeowners were also more likely to miscalculate the costs:
- Gen Z — 75%
- Millennials — 68%
- Gen X — 58%
- Baby boomers — 53%
This does not necessarily mean buying a home was a mistake. It does show why buyers need to look beyond the principal and interest portion of a mortgage payment when deciding how much house they can comfortably afford.
The Expenses Buyers May Forget
The full cost of homeownership can include:
- Property taxes
- Homeowners insurance
- HOA or community fees
- Electricity, gas, water, sewer, and trash service
- Lawn care and snow removal
- Routine maintenance
- Appliance replacement
- Unexpected repairs
Some expenses are fairly predictable, but others can arrive without much warning. A furnace may stop working, a roof may begin leaking, or a plumbing problem may require immediate attention.
Property taxes and homeowners insurance can also increase over time, causing a buyer’s total monthly payment to rise—even with a fixed-rate mortgage.
Unexpected Costs Can Create Financial Stress
For 64% of the homeowners surveyed, the cost of owning a home had caused financial stress. That figure increased to 70% among first-time buyers.
To cover expenses, respondents reported that they had:
- Used money from savings or an emergency fund — 56%
- Reduced everyday spending — 55%
- Increased credit card debt or used a personal loan — 41%
Despite these challenges, 35% of those surveyed said they did not have an emergency fund available for home-related problems.
Thirty-eight percent described themselves as “house-poor,” meaning housing costs left them with limited money for other priorities. In addition, 30% said at least 40% of their income was going toward housing expenses.
What Homeowners Wish They Had Known
Many buyers try to educate themselves before purchasing, but it can be difficult to know exactly what to expect. Survey respondents said they learned about homeownership expenses primarily from family and friends or through online research.
Even so, 52% of first-time buyers said they were not financially prepared when they purchased their home.
The three things homeowners most wished they had understood beforehand were:
- How much property taxes can increase — 53%
- The cost of maintenance and repairs — 52%
- The time and effort required for upkeep — 49%
These are important considerations, particularly when comparing an older home with a newer one. Older homes often have character and may be located in established neighborhoods, but buyers should pay close attention to the age and condition of the roof, furnace, air conditioner, electrical system, plumbing, sewer line, and windows.
How Buyers Can Prepare
Before making an offer, buyers should create a housing budget that includes more than the projected mortgage payment.
I recommend considering:
- The estimated property taxes after the purchase
- Homeowners insurance and possible flood insurance
- Average utility expenses
- HOA fees and what they cover
- The age of the home’s major systems
- Upcoming maintenance needs
- A monthly contribution to a home-repair fund
A professional home inspection can also help identify possible repairs, although no inspection can predict every future expense.
Most importantly, buyers do not have to spend the maximum amount a lender approves. Leaving room in the budget for repairs, rising costs, savings, travel, and everyday life can make homeownership far more comfortable.
Is Owning a Home Still Worth It?
Despite the unexpected costs, 91% of the homeowners surveyed said owning a home was worth the expense.
Homeownership can provide stability, the freedom to personalize your living space, and an opportunity to build equity over time. The goal is not to discourage buyers, but to help them enter the process with realistic expectations.
The more buyers understand the complete cost of owning a home, the better prepared they will be to choose a property—and a price range—that works for both their lifestyle and their finances.
